Hello everyone,
I have been looking for my next rental property to buy for the past 10 months with a few offers submitted but nothing closed. My strategy has been to focus on the lower income properties as this is easier to come up with the 25% down payments, eventually my plan is to move into B+ properties. The market just seems to "hot" right now on the lower priced properties and they still need a ton of work to be what I can accept as rentable.
So today I had a new thought as I was browsing through what is for sale in my own neighborhood. Why not buy another house in my neighborhood with an FHA loan and rent out my current primary residence? I just recently refinanced my primary into a conventional loan so a new FHA is an option. I looked up rental rates in my area and they seem very strong as we have a lot of military in the area. Are there any items I need to consider before going down this road? Here is a breakdown of my thoughts.
1. Primary will rent for about $1650 and current all in costs are $1390. If I count maint, management and repairs it doesn't make sense but the area is still appreciating and it is new so repairs should be low.
2. New house will be a bit smaller than primary but same neighborhood. Our mortgage payment should be similar to current. This gets me two houses in an A class neighborhood that should increase in value.
3. I can get a 200k house for 10k out of pocket vs my current strategy of a 40k property for 10k out of pocket.
4. New house adds some convenience as it backs into my kids school so my wife can just walk them to school and the yard is larger.
What else do I need to consider?